NATIONAL STOCK EXCHANGE OF INDIA LIMITED
Membership Department
Circular No.395
Ref: NSE/MEM/4972 April 7, 2004
Dear Members,
Sub. : Margin Trading and Securities Lending and Borrowing
SEBI has issued circular nos.
SEBI/MRD/SE/SU/Cir-15/04 dated
1. Margin Trading
1.1 SEBI had, vide Circular No.SMD/Policy/Cir-6 dated 7/5/97, clarified, inter alia, that borrowing and lending of funds by a trading member in connection with or incidental to or consequential upon the securities business would not be disqualified under rule/s 8(1)(f) & 8(3)(f) of Securities Contract (Regulations) Rules, 1957. In continuation of the said circular, it has now been decided to allow the member-brokers to provide margin trading facility to their clients, in the cash segment, subject to the conditions mentioned in this Circular.
1.2 Securities eligible for margin trading
1.2.1 SEBI vide circular dated March 11, 2003 has categorized the securities under 3 groups, namely, Group 1, Group 2 and Group 3. The securities having mean impact cost of less than or equal to 1 and having traded on atleast 80% (+/-5%) of the days for the previous eighteen months, have been categorized as Group 1. The securities in Group 1 would be eligible for margin trading facility.
1.3 Eligibility
requirements for brokers to provide margin trading facility to clients
1.3.1 Only corporate brokers with a “net worth” of
at least Rs.3.00 crore would be eligible to offer margin trading facility to
their clients. The “net worth” for the purpose of margin trading facility would mean
“Capital” (excluding preference share capital) plus free reserves less non
allowable assets, i.e fixed assets, pledged securities, member’s card,
non-allowable securities, bad deliveries, doubtful debts and advances
(including debts and advances overdue for more than 3 months or given to
associates), pre paid expenses, intangible assets and 30% of the marketable
securities.”
1.3.2 The broker shall submit to the stock exchange a half-yearly certificate, as on 31st March and 30th September of each year, from an auditor confirming the net worth as specified in clause 1.3.1. Such a certificate shall be submitted not later than 30th April and 31st October of the year.
1.4 Agreement
1.4.1 The broker shall enter into an agreement with his client for providing the margin trading facility, on the lines of the model agreement, enclosed as Annexure 1. The broker/exchange may modify the agreement only for stipulating any additional or more stringent conditions, provided that no such modification shall have the effect of diluting any of the conditions laid down in the circular or in the model agreement.
1.5 Source of Funds for the broker for providing margin trading
facility to his clients and maximum permissible borrowing by any broker
1.5.1 For the purpose of providing the margin trading facility, a broker may use his own funds or borrow from scheduled commercial banks and/or NBFCs regulated by RBI. A broker shall not be permitted to borrow funds from any other source.
1.5.2 The broker shall not use the funds of any client for providing the margin trading facility to another client, even if the same is authorised by the client.
1.5.3 At any point of time, the total indebtedness of a broker for the purpose of margin trading shall not exceed 5 times of his net worth, calculated as stated at para 1.3.1 above.
1.5.4 The “maximum allowable exposure” of the broker towards the margin trading facility shall be within the self imposed prudential limits and shall not, in any case, exceed the borrowed funds and 50% of his “net worth”. The term “exposure” will mean the aggregate outstanding margin trading amount in the books of the broker for all his clients.
1.5.5 While providing the margin trading facility, the broker shall be prudent and also ensure that there is no concentration on any single client. In any case, the exposure to any single client at any point of time shall not exceed 10% of the broker’s lendable resource (i.e. borrowed funds for the purpose of margin trading + 50% of net worth).
1.6 Margin requirements
1.6.1 The initial and maintenance margin for the client shall be a minimum of 50% and 40% respectively, to be paid in cash. For this purpose;
i. “initial margin” would mean the minimum amount, calculated as a percentage of the transaction value, to be placed by the client, with the broker, before the actual purchase. The broker may advance the balance amount to meet full settlement obligations.
ii. “Maintenance margin” would mean the minimum amount, calculated as a percentage of the market value of the securities, calculated with respect to the last trading day’s closing price, to be maintained by the client with the broker.
1.6.2 When the balance deposit in the client’s margin account falls below the required maintenance margin, the broker shall promptly make margin calls. However, no further exposure can be granted to the client on the basis of any increase in the market value of the securities.
1.6.3 The exchange/broker shall have the discretion to increase the margins mentioned at 1.6.1 above and in such a case, the margin call shall be made, as and when required.
1.7 Liquidation
of securities by the broker in case of default by the client
1.7.1 The broker may liquidate the securities if the client fails to meet the margin call made by the broker or fails to deposit the cheques on the day following the day on which the margin call has been made or where the cheque deposited by the client has been dishonoured.
1.7.2 The broker may also liquidate the securities in case the client’s deposit in the margin account (after adjustment for mark to market losses) falls to 30% or less of the latest market value of the securities, in the interregnum between making of the margin call and receipt of payment from the client.
1.7.3 However, the broker shall not liquidate or use in any manner the securities of the client in any situation other than the ones mentioned at paras 1.7.1 and 1.7.2.
1.8 Maintenance of
Records
1.8.1 The broker shall maintain separate client wise accounts of the securities purchased on margin trading with depositories and shall enable the client to observe the movement of securities from his account (through internet). The broker shall also maintain a separate record of details (including the sources) of funds used for the purpose of margin trading.
1.8.2 The books of accounts, maintained by the broker, with respect to the margin trading facility offered by it, shall be got audited on a half yearly basis. The broker shall submit an auditor’s certificate to the exchange/s, within one month from the date of the half year ending 31st March and 30th September of a year certifying, inter alia, the extent of compliance with the conditions of margin trading facility. This certificate is in addition to the certificate on net-worth specified in clause 1.3.2.
1.8.3 SEBI and the stock exchange/s shall have the right to inspect the books of accounts and/or any other documents maintained by the broker with respect to the margin trading facility.
1.9 Disclosure of exposure to the
Margin Trading Facility
1.9.1 The broker shall disclose to the stock exchange/s details on gross exposure including name of the client, Unique Identification Number (UIN) under the SEBI (Central Database of Market Participants) Regulations, 2003, name of the scrip and if the broker has borrowed funds for the purpose of providing margin trading facility, name of the lender and amount borrowed, on or before 12 noon on the following day.
1.9.2 The stock exchange/s shall disclose the scrip wise gross outstanding in margin accounts with all brokers to the market. Such disclosure regarding margin trading done on any day shall be made available after the trading hours on the following day, through its website.
1.9.3 The formats for such disclosures by the broker to the exchange and the exchange to the public are enclosed at Annexure 2 and 3 respectively.
1.9.4 The stock exchanges shall also put in place a suitable mechanism to capture and maintain all relevant details including member-wise, client-wise, scrip-wise information and source of funds of the members, pertaining to margin trading on their exchange, both on daily as well as on cumulative basis.
1.10 Arbitration
1.10.1The arbitration mechanism of the exchange would not be available for settlement of disputes, if any, between the client and broker, arising out of the margin trading facility. However, all transactions done on the exchange, whether normal or through margin trading facility, shall be covered under the arbitration mechanism of the exchange.
1.11 Investor
Protection Fund and Trade/Settlement Guarantee Fund
1.11.1 The amounts lying in the aforesaid funds would not be available for settling any loss suffered in connection with the margin trading facility. However, the aforesaid funds will continue to be available for all transactions done on the exchange, whether normal or through margin trading facility.
1.12 General
provisions
1.12.1The brokers wishing to extend the facility of margin trading to their clients would be required to obtain prior permission from the exchange/s where the margin trading facility is proposed to be provided. The exchange shall have the right to withdraw this permission at a later date, after giving reasons for the same.
1.12.2 A broker should take adequate care and exercise due diligence before providing margin trading facility to any client. Any broker providing margin trading facility to a client shall ensure that the client has obtained a Unique Identification Number (UIN) under the SEBI (Central Database of Market Participants) Regulations, 2003.
(SEBI vide its subsequent circular SEBI/MRD/SE/SU/Cir-16/04 dated March 31, 2004 has clarified that since the notified date for obtaining the new Unique Identification Number (UIN) by the intermediaries registered with SEBI has been postponed to June 30, 2004 and some intermediaries have informed SEBI that as at present, they are not in a position to obtain UIN for all their clients availing of margin trading facility in a short period of time on account of logistic difficulties, it has been decided to allow a further period of 3 months, i.e., up to June 30, 2004, to the clients who want to avail margin trading facility to obtain an UIN. Till such time the clients obtain the UIN, the broker shall obtain suitable undertaking from the clients and do due diligence to ensure that the client is not availing the margin trading facility from more than one broker at any point of time)
1.12.3 A client will be allowed to obtain margin trading facility from one broker per exchange for buying securities in that exchange. To ensure this, it shall be obligatory on the part of every broker to,
a) obtain a declaration from his client whether he has availed of any margin trading facility from any broker in any exchange, or whether his request for margin trading with any broker was rejected and if so, in both the cases, obtain the name of the broker and his registration number; and
b) also verify the details from the concerned broker/s.
1.12.4 Before providing margin trading facility to a client who has already availed of margin trading facility from another broker in the same exchange, the broker shall ensure that the client has liquidated his outstanding in the margin trading account with the other broker, and obtain a certificate to this effect in writing from that broker.
2 Securities
Lending and Borrowing
2.1 SEBI had, in 1997, formulated a scheme for securities lending and borrowing (copy enclosed as Annexure 4) under which certain intermediaries approved by SEBI could provide the securities lending and borrowing facility.
2.2 The entities desirous of offering the facility of securities lending and borrowing may seek registration with SEBI for the same under the scheme.
2.3 Borrowing
by Clearing Corporation/Clearing House
2.3.1
The clearing corporation/clearing house would require
to be registered as an approved intermediary with SEBI, under the SEBI scheme
for securities lending and borrowing, for handling settlement shortages.
2.3.2
The
clearing corporation/house may borrow, on behalf of the members, securities for
the purpose of meeting shortfalls, if any,
in the settlement, subject to the following :
i) The Clearing Corporation/House shall borrow the required securities to meet the shortfall on the day of settlement, for a maximum period of 7 trading days, excluding the day of borrowing.
ii)
The defaulter selling broker may make the
delivery within 3 trading days from the due date, i.e. the settlement date,
subject to charges for late delivery as may be prescribed by the stock exchanges.
iii)
In the event of the defaulted selling
broker failing to make the delivery within the aforesaid 3 trading days, the
Clearing Corporation/House shall buy the securities from the open market and
return the same to the lender within 7 trading days.
iv)
The cost, if any, incurred by the clearing
corporation/house in this regard shall be recovered from the defaulted selling
broker. This would be in addition to
other penal charges referred to at point (ii) above.
v)
The return of the borrowed securities by
the Clearing Corporation / House should be independent of the normal
settlement.
2.3.3 In
case of the inability of the clearing corporation/house to borrow the
securities fully or partly for the purpose of meeting the shortfall in the
settlement, the outstanding transaction shall be closed out, as described below
:
i.
The Clearing Corporation/House shall effect close
out of such remaining quantity and/or securities by paying monetary
compensation to the receiving/buying clearing member/s worked out as under and
debiting such amount to the account of the defaulting selling / delivering
clearing member/s :
10% on the
highest of the closing prices on the days from the trading day till the
settlement day.
2.3.4
The
exchanges and the clearing house/clearing corporation shall closely monitor the
shortages in securities in every exchange at the time of delivery in the
settlement and shall take appropriate punitive action against any member who is
found to be defaulting frequently in the delivery of securities.
2.3.5
The following
circulars issued by SEBI with respect to auction and/or closing out regarding
the cash market stand modified accordingly.
ii.
Circular No. SMD/POLICY/Cir-21/02 dated
iii.
Circular No. SMD/Policy/Cir-08/2002 dated
iv.
Circular No. SMD/Policy/Cir-03/2002 dated
v.
Circular No.TSMD/POLICY/IECG/5548/96
dated
(SEBI vide its subsequent
circular no. SEBI/MRD/SE/SU/Cir-16/04 dated
Members are requested to take note of the above.
for National Stock Exchange of India Limited,
V. Suresh
Manager
Annexure 1
MODEL MARGIN TRADING AGREEMENT
This Agreement (hereinafter referred to as “Agreement”) is entered into on this
_________ day of ______________ 20_____, by and between _________(broker
name)_____________, a Company incorporated under the Companies Act, 1956,
having its registered office at _________________________________(Head office)
and having one of its Branch Office at
____________________________________________________________________________________________________________________________________________________________________________(Branch
office address) (hereinafter referred to as “the broker”, which expression shall, unless repugnant to the
meaning or context thereof, be deemed to mean and include its successors and
assigns) of the One Part;
M/s/Mr/Mrs/Ms
_____________________________________________ , unique
client code being________________, whose details are as below
____________________________________,
____________________________________________________________________________________
____________________________________________________________________________________
(hereinafter referred to as the
“Client” which expression shall,
unless repugnant to the context or meaning thereof be deemed to include
his/her/its heirs and/or legal representatives and/or successors and/or
executors and/or permitted assignees and/or administrators and/or successors in
business) of the Other Part
WHEREAS:
(a) ________(BROKER)_____ is engaged, inter alia, in the business of stock broking and is a Trading Member
of _______________________ (Names of stock exchange(s)), with SEBI registration
Number (s) ____________________________________.
(b) ________(BROKER)_____
is engaged in providing margin Trading Facility (hereinafter referred to as
MTF), as described hereinafter, to those clients who are registered with it as
client for availing Stock Broking Services and have also entered into an
agreement for availing of the Margin Trading Facility.
(c) The Client is registered
with ________(BROKER)_____ as a
client for stock broking services and is desirous of availing Margin Trading
Facility, and has approached ________(BROKER)_____ with that request
(d) Upon the request of the
Client, ________(BROKER)_____ has agreed to provide the said facility
to the client subject to the terms and conditions contained in this Agreement
NOW THIS AGREEMENT WITNESSETH AND
IT IS HEREBY AGREED BY AND BETWEEN ________(BROKER)_____ AND CLIENT AS UNDER:
1. “Initial
margin” means the minimum amount, calculated as a percentage of the
transaction value, to be placed by the client, with the broker, before the
actual purchase. The broker will advance the balance amount to meet full
settlement obligations.
2. “Maintenance
margin” means the minimum amount, calculated as a percentage of the market
value of the securities, calculated with respect to the last trading day’s
closing price, to be maintained by the client with the broker.
3. “Margin
Trading Facility” or MTF means and refers to the facility pursuant to which
part of the transaction value due to the Stock Exchange, at the time of
purchase of Shares, shall be paid by ______________(BROKER) on behalf of the
Client on Client’s request, on such terms and conditions as contained in this
Agreement.
4. “Mark to Market Loss” or “MTM Loss” means the difference between the purchase value of the
shares and the marked to market value of these shares.
5. “Mark to Market Value of shares” or “MTM Value of Shares” means the value of shares calculated
with reference to the previous day’s closing price on the Stock Exchange.
6. “Share/s” means
and refer to the shares / stock / securities eligible for margin trading
facility, as specified by the SEBI from time to time and approved by
______________(BROKER) for the purpose of granting
MTF.
7. “Stock Exchange” means the stock exchange on which the shares has been purchased
Unless the Context otherwise requires:
1. The expression month and year shall
be to the calendar month or calendar year
2. Reference to date or dates which do not
fall on a working day, shall be construed as reference to the day or date
falling on the immediately subsequent Working day
The Client hereby undertakes to:
1. Place the initial and maintenance
margin amounts as the Broker may specify to the Client from time to time, subject to requirements
specified by SEBI.
2. Authorize retention of the shares
with the broker upon the receipt of the same in the pay out from the Stock
exchange till the amount due in respect of the said transaction including the
dues to the broker is paid in full by the client.
3. To pay to the broker - brokerage,
commission, fees, transaction costs, service tax, stamp duty and other taxes /
expenses as are prevailing from time to time and as they apply to the Client’s
account, transactions and to the Services that the broker renders to the
Client.
4. Abide by any revision in any of the
terms of this agreement as may be agreed between the parties
The Client warrants, represents and assures
______________(BROKER) that:
1. He has the necessary authority to
enter into this Agreement and observe and perform the obligations herein
contained.
2. He shall duly observe and perform the
conditions and obligations stated herein.
IV. BROKER’SREPRESENTATION
The _______________(Broker)
represents that:
1. On entering into this agreement and
deposit of intial margin by the client, the _______________(Broker) undertakes
to settle the obligation towards the Stock Exchange for and on behalf of the
Client . The Client hereby agrees and authorizes the _______________(Broker) to
make such payment on his behalf.
V. MARGIN TRADING FACILITY
1. The margin facility shall carry
interest at _% per annum payable ________.
2. The Client shall be free to take the
delivery of the Share at any time by repaying the amounts that was paid by
______________(BROKER) to the Stock Exchange towards
Shares, and further paying all such sums of money as may be due towards
brokerage, transaction costs and charges, service tax and other costs towards
his transactions. Alternatively, Client may at any time, but not before the
delivery of the Shares has been actually received by ______________(BROKER),
choose to sell the Shares on the Stock Exchange by issuing appropriate instructions
to _______________(Broker)
3. Provided however that, the Client may
at his risk as to cost and consequences, choose to sell the Shares prior to
receipt of confirmation from the Stock Exchange of delivery of Securities
against his Purchase, and in such situation, the Client shall be fully
responsible to bear the losses / costs arising due to auctions / closeout by
the Stock Exchange, in the event the delivery against purchase fails to materialise
4. Where the Shares are sold as provided
in sub-clause 2/3 above, ______________(BROKER) will
effect the pay-in of Shares to the Stock Exchange in accordance with the Stock
Exchange requirements. Upon receipt of sale proceeds from the Stock Exchange
towards the sale of Shares, ______________(BROKER) shall, after deducting therefrom brokerage, fees, charges, levies, taxes, duties
and other costs, charges and expenses, and further deducting amounts due to it
from the Client on account of moneys paid by ______________(BROKER) on his
behalf to the Stock Exchange at the time of purchase of Shares, effect the net
payment to the Client
5. ______________(BROKER)
may, at its sole and absolute discretion, revise the limit of initial and/or
maintenance margin amount from time to time. The Client agrees and undertakes
to abide by such revision, and where there is an upward revision of such margin
amount, he agrees to make up the shortfall within such time as
______________(BROKER) may permit, failing which the Client shall be deemed to
be in breach of this Agreement.
6. The MTF shall be provided only in
respect of such Shares as may be decided by ______________(BROKER)
from time to time.
7. The Client may furnish further Margin
Amount from time to time for availing higher MTF Limit.
1. ______________(BROKER)
shall monitor and review on a continuous basis the client’s positions with
regard to the margin trading facility.
2. The (BROKER) shall make a ‘margin
call’ requiring the client to place such Margin Amount as may be specified by
______________(BROKER) with a view to make up for the MTM Loss, If any, in
accordance with SEBI requirements.
3. On receipt of ‘margin call’
intimation from ______________(BROKER), the Client shall make good such
deficiency by placing the further Margin Amount, within such time as is
specified by SEBI, failing which the Client shall be deemed to be in breach of
this Agreement
4. Notwithstanding what is stated above,
______________(BROKER) may immediately sell the Shares, in the circumstances
specified by SEBI and for this purpose, the Client do hereby expressly
authorize such sale, and thereafter, the sale proceeds shall be treated in the
manner specified in Clause V.4 above. The ______________(BROKER)
may, in its sole discretion, determine which Shares is/are to be sold, and / or
which contract(s) is/are to be closed.
5. The Client agrees and understands
that ______________(BROKER) shall have full freedom and authority to vary,
modify, revise the initial and maintenance margin amount, minimum transaction
amount from time to time, subject to the SEBI requirements in this respect, and
Client agrees to abide by such variation, modification or revision
Notwithstanding
anything contained in this Agreement, the Client hereby pledges and shall have
deemed to have pledged forthwith the Shares, at the time when received by
______________(BROKER), as security for repayment and
settlement of amounts due to ______________(BROKER) from the Client under
Margin Trading Facility along with interest and other amounts payable thereunder. The Client hereby records that the share
certificates account statements or any other documents evidencing the right,
title and interest of the Client as the holder of the Securities shall remain
deposited and shall be deemed to have been deposited by the Client as having
been deposited being marketable securities, for repayment of the amounts due
under the Margin Trading Facility and this instrument accordingly shall be
deemed to be connected with the mortgage of the marketable securities / Shares
as contemplated by Section 24 of the Bombay Stamp Act, 1958/Section 23A of the
Indian Stamp Act, 1899 or the corresponding/relevant provisions of the Stamp
Act as in force in the relevant state.
In the event of Client committing any breach of any
terms or condition of this Agreement, ______________(BROKER)
shall be entitled to terminate this Agreement forthwith. However,
______________(BROKER) at its option may elect to give notice to the Client of
such duration, and extended from time to time, if so decided by
______________(BROKER), requiring the Client to cure the breach.
1. This Agreement shall stand terminated
forthwith, as provided in Clause VIII above, or on the Client failing
to cure the breach within the time period as provided in the Notice given thereunder.
2. This Agreement shall automatically
stand terminated, without any further act on the part of any party hereto, on
and from the date of termination/determination of the Client Member Agreement
executed between the parties hereto in respect of stock broking services
provided / being provided by ______________(BROKER) to
the Client.
3. In the event of termination / determination
of this Agreement, the Client shall forthwith settle the dues of ______________(BROKER). ______________(BROKER)
shall be entitled to immediately adjust the Margin Amount against the dues of
the Client, and the Client hereby authorizes ______________(BROKER) to make
such adjustment.
4. After such adjustment, if any further
amount is due from the Client to ______________(BROKER),
the Client shall settle the same forthwith. Upon full settlement of all the
dues of the Client to ______________(BROKER),
______________(BROKER) shall release the balance amount to the Client.
5. In the event of failure of the Client
to settle the dues of ______________(BROKER) within ____ days,
______________(BROKER) shall be entitled to enforce its rights and shall be
entitled to sell off Shares, and adjust/apply the net sale proceeds thereof in
recovery of its dues.
1. Any notice or other communication to
be given by one party to the other under or in connection with this Agreement
shall be in writing and shall be deemed duly served if delivered personally or
sent by confirmed facsimile transmission or by prepaid registered post or email
to the addressee at the address / number (if any), of that party set opposite
its name below:
(a) Notices / Communications to be sent to
______________(BROKER):
Address :
________________________________________________________
________________________________________________________
Fax : ______________________
E-mail:
(b) Notices
/ Communications to be sent to the Client:
Address:
_________________________________________________________
_________________________________________________________
Fax:
___________________________________
Email: ___________________________________
Subject to SEBI requirements, any of the terms and
conditions of this Agreement may be waived at any time by
______________(BROKER), but no such waiver shall affect or impair the right of ______________(BROKER)
to require observance and performance of any other term or condition hereof and
no waiver hereunder shall be considered valid unless made in writing and signed
by ______________(BROKER) and no such waiver, or any failure or delay on the
part of ______________(BROKER) to exercise any right, power or privilege
hereunder shall be deemed a waiver of any subsequent breach of default nor
shall any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege.
The member
hereby undertakes to maintain, the details of the client as mentioned in the
client registration form or any other information pertaining to the client, in
confidence and that he shall not disclose the same to any person / entity
except as required under the law
Provided
however, that the member may share the details of the client as mentioned in
the client registration form or any other information pertaining to the client
with parties/entities other than required under law with the express permission
of the client
IN WITNESS WHEREOF the parties hereto have set their
respective hands on the date above-mentioned
Signed and delivered by _______________
)
___________________________________ )
for and on behalf of )
_______________(Broker) )
in the presence of: )
___________________________________ )
Signed and delivered by the within
named )
Client, _____________________________
)
__________________________________ ) X
in the presence of: )
__________________________________ )
Annexure 2
Format of the Daily Reporting by the
members to the Exchange on the amount financed by them under the Margin Trading
Facility
Name of the member Clearing
No.
|
Name of the Client |
MAPIN No. |
Name of the scrip/s |
Qty financed (No. of shares) |
Amount financed (Rs. in lakhs) |
|
|
|
|
|
|
|
Sl.No. |
Particulars |
(Rs. in lakhs) |
|
01 |
Total outstanding on the beginning of the day |
|
|
02 |
Add : Fresh exposure taken during the day |
|
|
03 |
Less: exposure liquidated during the day |
|
|
04 |
Net outstanding at the end of the day |
|
SOURCES
OF FUNDS (Refer to item No. 4 above)
|
01 |
Out of net worth |
|
|
02 |
Out of borrowed funds |
|
|
03 |
If borrowed, name of lenders and amount borrowed to be specified separately |
|
Note:
Disclosure is required to be
made on or before
Annexure
3
Format for the dissemination of
information by the stock exchange to the market
|
Name of the scrip |
Qty. financed by all the members (No. of shares) |
Amount financed by all the members (Rs. in lakhs) |
|
|
|
|
|
Sl.No. |
Particulars |
(Rs. in lakhs) |
|
01 |
Scrip-wise total outstanding on the beginning of the day |
|
|
02 |
Add : Fresh exposure taken during the day |
|
|
03 |
Less: exposure liquidated during the day |
|
|
04 |
Net scrip-wise outstanding at the end of the day |
|
Note: Disclosure is required to be made immediately after the trading hours on the following day (in respect of previous day’s margin trading facility).
Annexure
4
SECURITIES LENDING SCHEME
1. PRELIMINARY
(1) This scheme shall be called the Securities Lending Scheme, 1997
2. APPLICABILITY
(1) It shall come into force on
3. DEFINITIONS
(1) In this scheme, unless the context otherwise requires :-
(a.) “approved intermediary” means a person duly registered by the Board under the guidelines/scheme through whom the lender will deposit the securities for lending and the borrower will borrow the securities;
(b.) “Board” means the Securities and Exchange Board of India (SEBI) established under Section 3 of the Securities and Exchange Board of India Act, 1992;
(c.) “borrower” means a person who borrows the securities under the scheme through an approved intermediary;
(d.) “corporate benefits” shall include dividends(gross), rights, bonus, redemption benefits, interest, or any other right or benefit accruing on the securities lent;
(e.) “lender” means a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the scheme;
(f.) “securities” has the meaning assigned to it in Section 2 of the Securities Contracts (Regulation) Act, 1956;
(g.) “scheme” means Securities Lending Scheme, 1997 for lending of securities through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed.
(2) Words and expression used and not defined
for the purpose of this Scheme but defined in the Securities Contracts
(regulation) Act, 1956 or SEBI Act shall have the meanings respectively
assigned to them in that Act or rule and regulations made thereunder.
4. SCHEME
(1) The lender shall enter into an agreement with the approved intermediary for depositing the securities for the purpose of lending through approved intermediary as per the scheme and the borrower shall enter into an agreement with the approved intermediary for the purpose of borrowing of securities and as such there shall be no direct agreement between the lender and the borrower for the lending or borrowing of securities.
(2) The agreement between the lender and the approved intermediary shall provide that when the lender has deposited the securities with the approved intermediary under the scheme, the beneficial interest shall continue to remain with the lender and all the corporate benefits shall accrue to the lender.
(3) The lender shall be entitled to deposit only those securities registered in his name or in the name of any other person duly authorised on his behalf with the ‘approved intermediary’ for the purpose of lending.
(4) The lending of securities under the scheme through an approved intermediary and the return of the equivalent securities of the same type and class by the borrower shall not be treated as disposal of the securities.
(5) The approved intermediary shall issue a receipt to the lender acknowledging the deposit of the securities by the lender.
(6) The approved intermediary shall unless otherwise provided in the agreement with the lender, guarantee the return of the equivalent securities of the same type and class to the lender along with the corporate benefits accrued on them during the tenure of the borrowing. Even in case of failure of the borrower to return the securities or corporate benefits the approved intermediary shall be liable for making good the loss caused to the lender.
(7) The approved intermediary may retain the securities deposited by the lender in its custody as a trustee on behalf of the lender.
(8) The approved intermediary shall in accordance with the terms of the agreement entered into with the lender, be entitled to lend the securities deposited by the lender to the borrower from time to time.
(9) Under the scheme, the title of the securities lent to the borrower shall vest with the borrower and the borrower shall be entitled to deal with or dispose of the securities borrowed in any manner whatsoever.
(10) The agreement between the borrower and the approved intermediary shall inter- alia provide that the borrower shall have an obligation to return, the equivalent number of securities of the same type and class borrowed, to the approved intermediary within the time specified in the agreement along with all the corporate benefits which have accrued thereon during the period of borrowing.
(11)The agreement between the lender and the approved intermediary and the borrower and the approved intermediary, shall also provide for the following terms and conditions :-
(a) the period of depositing/lending of securities,
(b) charges or fees for depositing/lending and borrowing,
(c) collateral securities for borrowing,
(d) provisions for the return including premature return of the securities deposited or lent; and
(e) mechanism for resolution of the disputes through arbitration.
(12) The borrower shall not be entitled to discharge his liabilities of returning the equivalent securities through payment in cash or kind.
(13) The approved intermediary shall be entitled to receive from the borrower collateral security and fees for lending the securities.
(14) The borrower shall deposit the collateral securities with the approved intermediary in the form of cash, bank guarantee, Government securities or certificate of deposits or other securities as may be agreed upon with the approved intermediary for the purpose of ensuring the return of the securities.
(15) When the approved intermediary returns securities to the lender, the approved intermediary shall issue a receipt to the lender.
(16) The approved intermediary shall maintain a complete record of the securities deposited by the lender, securities lent to the borrower, the securities received from the borrower and the securities returned to the lender by the approved intermediary.
(17) In the event of the failure of the borrower to return the securities in terms of the agreement, the borrower shall become a defaulter and the approved intermediary shall have the right to liquidate the collateral deposited with it, in order to purchase from the market the equivalent securities of the same class and type for purpose of returning the equivalent securities to the lender. The approved intermediary shall be entitled to take any action as deemed appropriate against the defaulting borrower to make good its loss, if any.
(18) The approved intermediary shall notify defaults by any borrower to the Board, the concerned stock exchange and the concerned authorities for initiation of appropriate action against the defaulter.
5. ELIGIBILITY CRITERIA FOR APPROVED INTERMEDIARY
No person shall act as an approved intermediary unless a certificate of registration has been obtained from the Board.
For the grant of a certificate of registration the Board shall take into account the following:
(a) whether the applicant is a person with minimum networth of Rs.50 crores;
(b) if the applicant is a clearing house or a clearing corporation and it has the networth specified by the Board after consulting the stock exchange;
(c) whether the applicant has adequate infrastructure facilities like office space, equipment and manpower experienced in dealing in securities to effectively discharge its activities.
6. OBLIGATIONS AND RESPONSIBILITIES OF APPROVED INTERMEDIARY
An approved intermediary shall comply with the following obligations and responsibilities:-
(1) The approved intermediary shall abide by the scheme and the guidelines issued by the Board from time to time with respect to its activity of securities lending.
(2) The approved intermediary shall comply with the requirement of eligibility criteria for the lender and the borrower with the eligibility criteria, if, specified by the Board.
(3) The approved intermediary shall specify in the respective agreement the fees payable to the lender and the fee to be charged from the borrower.
(4) The approved intermediary shall specify the amount and type of collateral acceptable for the purpose of securities lending as well as the norms for the valuation of securities. It may also specify the mechanism of sharing the income on collateral with the borrower.
(5) The approved intermediary at the request of lender shall issue a receipt acknowledging the deposit of the securities by the lender. The receipt shall include the complete details of securities deposited such as name of security, quantity, face value, certificate number and folio number of the lender along with the date from when the lender has become the registered holder of the security. Similarly, when securities are returned to the lender by approved intermediary, it shall issue a receipt containing the above details to enable the lender to use the same as a proof of continuity of his holdings.
(6) The approved intermediary shall maintain a complete record of the securities deposited by the lender, securities lent to the borrower, the securities received from the borrower and the securities returned to the lender by the approved intermediary. The records of the approved intermediary shall be open for inspection by the Board or any other person duly authorised by the Board for this purpose.
(7) The approved intermediary shall maintain and make available to the Board such information, documents, returns and reports as may be specified from time to time.
(8) The approved intermediary shall abide by the code of conduct as may be specified by the Board.
(9) Nothing in this scheme shall exempt the approved intermediary from discharging any obligations placed on it by any law, regulations and guidelines.
7. GUIDELINES
FOR APPROVED INTERMEDIARIES
Terms of Registration :
(a) The registration shall be for an initial period of three years.
(b) The approved intermediary as a condition of registration shall be required to pay fees as specified by the Board.
(c) The Board shall have the right to suspend/cancel the registration of the approved intermediary in case of violation of the terms of the scheme.
(d) Notwithstanding anything contained above, no action shall be initiated by the Board without following the principles of natural justice.